Correlation Between Ashtead Group and BOC Aviation
Can any of the company-specific risk be diversified away by investing in both Ashtead Group and BOC Aviation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ashtead Group and BOC Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashtead Group plc and BOC Aviation Limited, you can compare the effects of market volatilities on Ashtead Group and BOC Aviation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ashtead Group with a short position of BOC Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashtead Group and BOC Aviation.
Diversification Opportunities for Ashtead Group and BOC Aviation
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ashtead and BOC is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ashtead Group plc and BOC Aviation Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Aviation Limited and Ashtead Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ashtead Group plc are associated (or correlated) with BOC Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Aviation Limited has no effect on the direction of Ashtead Group i.e., Ashtead Group and BOC Aviation go up and down completely randomly.
Pair Corralation between Ashtead Group and BOC Aviation
Assuming the 90 days horizon Ashtead Group plc is expected to generate 0.97 times more return on investment than BOC Aviation. However, Ashtead Group plc is 1.03 times less risky than BOC Aviation. It trades about 0.27 of its potential returns per unit of risk. BOC Aviation Limited is currently generating about -0.1 per unit of risk. If you would invest 6,146 in Ashtead Group plc on November 2, 2024 and sell it today you would earn a total of 604.00 from holding Ashtead Group plc or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashtead Group plc vs. BOC Aviation Limited
Performance |
| Timeline |
| Ashtead Group plc |
| BOC Aviation Limited |
Ashtead Group and BOC Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashtead Group and BOC Aviation
The main advantage of trading using opposite Ashtead Group and BOC Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashtead Group position performs unexpectedly, BOC Aviation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BOC Aviation will offset losses from the drop in BOC Aviation's long position.| Ashtead Group vs. African Discovery Group | Ashtead Group vs. Emeco Holdings Limited | Ashtead Group vs. Solution Financial | Ashtead Group vs. BOC Aviation Limited |
| BOC Aviation vs. Alta Equipment Group | BOC Aviation vs. Black Diamond Group | BOC Aviation vs. Ashtead Group plc | BOC Aviation vs. African Discovery Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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